FX Indices Review for 23/07/12

NB: Much of this analysis is the same as for last week. The USDX 84 area is still the key region to watch!

USDX Charts
Monthly

Weekly

Daily

4 hr: Note how we got the bullish breakout of the descending wedge pattern during the Friday US session

EURX Charts
Monthly

 Weekly

Daily

 4 hr

Thoughts:

The USDX is staging another assault on the major resistance of 84.  The 84 region is the area of the:

• 200 EMA on the monthly chart at the 84.2 level. 
• 75% fib retrace level from the last swing high back in mid 2010 and, also, 
• the psychological whole number level of 84. 

I've mentioned over the last few weeks that the USDX 84 level will be the 'water mark' for market sentiment. The 84 level is, again, the key level to watch this week. A break up, close and hold above this level 84 area could result in an extended period of 'risk off' trading. A failure to breach the 84 level could result in an extended period of 'risk on' currency trading and stock market gains.

I will look for 'risk on' trades if:

• the USDX holds below the 84 area. This is the area of the monthly 200 EMA, a major previous S/R level and the 75 % fib retrace from the last major swing high AND
•  the EURX turns bullish and especially if it can break back above the holds above 100 area. This is the area of the monthly pivot, the 4hr 200 EMA and a previous strong S/R level.

I will look for 'risk off' trades if:

• the USDX breaks above the 84 area AND
• if the EURX remains bearish.